The first sixth form college to become an academy converted its status on 1 March 2017, over a year after the announcement in the 2015 Autumn Statement that it was to become possible.

Since that time many more sixth form colleges have followed, but it is not always the right decision, despite the opportunity to recover VAT on all non-business activities.

The main initial concern was the impact on buildings that previously had been granted a VAT exemption on construction, but upon conversion required repayment of the VAT avoided. To overcome this problem a temporary "Restructuring Facility" was provided by the ESFA to provide funding for the additional VAT cost. The programme providing this financial support closed on 28 September 2018, with funding only available until March 2019.

The problem of VAT on construction is likely to be a temporary problem, as the change of use claw back only applies for 10 years from the practical completion of the building, but without the availability of the "Restructuring Facility" funding it requires a careful review before conversion.

Any sixth form colleges that have not converted to academy status and are considering new building construction should take VAT advice beforehand, in case conversion at a later date is affected.

The benefits of conversion are similar to those for academy schools for under-16's, but sometimes the activities of a sixth form college include more business activities than other academies and this may affect the financial benefit of conversion. Some of the factors that may affect sixth form colleges in this way could include:-

  • Catering facilities and wider use of vending machines
  • Operation of boarding facilities
  • Provision of paid non-educational opportunities
  • Letting of specialist facilities and buildings

The VAT issues relating to many of the activities that may take place are explained in our VAT Treatment pages, which explain the opportunity to recover VAT and the obligations to charge VAT on various activities.

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